Double, Double OIL and Trouble … and VIX Did?

Yo Pit Crazies,


I am playing fast and loose with good ole Bill Shakespeare there in the title, but the time is now to jump in the cauldron and put your VIX learning on.  


Learning to use VIX to see where the market is going is a  little like witchcraft.


If the S&P 500 (SPX) is the heartbeat of the stock market, then the VIX is blood pressure. I’ll show you how to take the pulse


The big problem is oil …


The Biden White House floated the Strategic Oil Reserve (SRO) as a possible fix for oil prices.  This is one year after a glut … um, OK.


Oh and Jerome Powell is back as the Fed Chair with Lael Brainard as vice chair.


All of this should have brought VIX down a touch, but something wicked happened on the way to the J-Pow coronation party …


VIX Jumped Over 1.26 Yesterday to 19.17


What’s the big deal, you ask?


SPX ended the day only down .32% after being up 1%-plus at one point. 


The specter of higher interest rates trumped everything, J-Pow and temporary oil solution notwithstanding.


Powershares Invesco QQQ Trust Series 1 (QQQ) is heavy on the future of tech and the future of tech doesn’t like higher interest rates (thanks to all that debt).


The intraday moves ARE WHAT MATTERED YESTERDAY. Note below, the VIX curve shape did not change much.


VIX term structure, Nov. 19 and Nov. 22 trade date.


What did jump was 9-day VIX, with the intraday move more like 1.40% from top to bottom, which is closer to a 22% VIX.  



In the Pro Chat room we have looked at 9% IVs in SPX that were probably too cheap for the weekly options. That issue has been fixed by the market.


In reality, the VIX futures moved very little with the iPath Series B S&P VIX futures ETN (VXX) up a whopping .37 on Monday and into the close it was not holding that bid.


What we have is a case of Vol Fatigue — high IV and little movement, and a QQQ that is up 7% in a month.


I think Monday was more of a relief than anything and a good time to look for an SPX butterfly, pointing upward for the short term with a vol sale. 


4,700 comes calling once again.


The Rundown


Capitol Gains w/ Frank Gregory
Option Pit DC and Wall Street insider Frank Gregory and I run a portfolio approach to trading options with stocks that have good long-term prospects based on Frank’s K Street knowledge and my options expertise.

      • I closed some Ford Motor Co. (Ticker: F) put spreads for an 80% gain to keep the run going on a 50% win per month rolling. I expect to roll those dollars into F calls. Check out the latest video here.  


Other stocks currently in the CAPITOL GAINS portfolio:


      • Regeneron Inc. (Ticker: REGN) long COVID therapies
      • Mandiant Inc. (Ticker: MNDT) long Cybersecurity
      • PetroBras SA (Ticker: PBR) long oil
      • SPDR Oil and Gas Explorers (Ticker: XOP) long oil
      • Intel Corp (Ticker: INTC) long chip shortage
      • Powershares QQQ Trust (Ticker: QQQ) portfolio hedge
      • Canejo Corp (CCJ) long Uranium Play
      • Ford Motor Company (F)
      • Palantir Technologies Inc (PLTR)


Power Income Trader:

Power Income Trader is a systematic approach to trading inflation.  By pulling real-time data from the Fed, US Treasury and Gov’t, Power Income Trader alerts users on changes in money flow driven by Fed policy. Bill’s system puts you out in front of the most powerful money flow in the world.



Pro Trading Room:
The Pro Room is Option Pit’s live access to Mark and myself during trading hours. Our Pro students post trade ideas with Mark and me during the entire trading session. 


The Pro Room was looking at getting long some commodities today on the knee jerk news.


Richard scored a nice win with a calendar that produced big gains Monday morning and he closed most of the upside call calendars.



Big Money Flow

Each week, Option Pit CEO Mark Sebastian looks at size institutional option buying with a twist.  He mostly buys calls or puts to ride the large momentum trades.


      • I added some F diagonal call spreads to the Turbo Trade that are marking up 10%. That’s three  in a row for me in the Turbo Trade lately.


Trading Legion:
The Trading Legion is an intermediate-level education and a long strangle/calendar trading vehicle. The goal is to teach students the best times to buy options.


      • I closed all the calls on Friday in  iShares Barclays 20+ year Treasury Bond ETF (Ticker: TLT) and now the puts are just marking the position in the green so a little jump in rates will bring home the turkey this week.


Volatility Edge & Volatility Trading Club:

Volatility Edge is run by Mark and uses the proprietary Option Pit VIX Light indicator to guide volatility trading. The Vol Trade Club is run by me (AG), and employs a long strangle strategy that seeks to use VIX future decay to pay for upside Cboe Volatility Index VIX, iPath Series B S&P 500 VIX Short Term Futures ETN (VXX) and ProShares Ultra S&P Short Term VIX Futures ETN (UVXY) options.

The Option Pit VIX Light Is Red into the holidays, but with Vol Fatigue and higher VIX I don’t expect very much action to be quite honest.


Remember, a lot of vol strategies I use are market neutral. That means whether SPX or VIX go up or down, the positions still make money. This is a technique you can learn in the Volatility Trading Club and Volatility Edge!


To Your Trading Success,



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